the most important thing citizens should know

If I had to pick one thing that a citizen of the USA should know, it would be the allocation of money in the federal budget. A simple pie chart is shown below. It’s a static image from the National Priorities Project‘s website, which is rich with interactive graphs and even provides a “Build a Better Budget” simulation. Along with the pie chart, another critical graph shows the basic historical trends over recent decades.

The NPP is helping with public education, but the problem is serious. Right after the election, we asked almost 4,500 young adults, “Does the government spend more on Social Security or foreign aid?” The right answer is Social Security (by a ratio of about 26:1, if we define “aid” as economic assistance, or about 20:1, if we include military assistance). A majority (51.3%) of the young adults chose the wrong answer–foreign aid–and just 29% got the question right.

This is not a youth problem only. In 2011, CNN and the Opinion Research Corporation asked adults how much of the budget the federal government allocates to various programs. The median estimate was 20% for Social Security (which is close to the correct proportion), but 10% for foreign aid (which is far too high).

It’s hard to have a debate about what should happen if people don’t understand what is happening. We don’t teach this kind of material in schools, the mass media don’t explain it regularly or helpfully, and politicians have incentives to obfuscate.

About Peter

Associate Dean for Research and the Lincoln Filene Professor of Citizenship and Public Affairs at Tufts University's Tisch College of Civic Life. Concerned about civic education, civic engagement, and democratic reform in the United States and elsewhere.

What I don’t understand is why SS is considered part of the National Budget. My understanding is that the government infests the SS money that has been withheld from our paychecks to provide it back to us when we reach retirement age. The rest of the budget should then be covered by income tax right?

PeterLevine

I think it’s basically a fiction that the government holds the Social Security money in a separate investment account for the individual who pays in. From the very beginning, the current beneficiaries have always been covered by current taxes. Otherwise, there would have been no money to cover the retirees of 1932. There is a Social Security Trust Fund, but it doesn’t really make any difference that that is separated from the rest of the federal government’s assets. It’s just a way to signal a commitment to pay later. The money is fungible.

Rob Burns

Actually I think you’re pointing the finger in the wrong direction. The problem is the budget and the accountancy of the government itself. The public has some vague sense that it is government subsidies that should concern them and not government spending in general. So Social Security is as large as it needs to be to meet the demand for that retirement pension program. However, zero dollars is used to subsidize Social Security. On the other hand billions of dollars are used to subsidize foreign aid.

Therefore it is the reporting on the budget and the accountancy of our actual fiscal measures that is lacking. When we look at priorities, we should be looking at the subsidy priorities. Those resources we subsidize we should subsidize because those resources exhibit what we economists call positive externalities (as determined by legislative deliberation). Focusing on spending in general distracts us from the real important subsidization issue.

PeterLevine

Hmm, I am not sure I understand. Couldn’t we just as well say the following? The foreign aid bill is barely sufficient to meet the need for that program, as identified by Congress and public opinion. So foreign aid is not “subsidized”; it is covered by taxes. On the other hand, low income people pay much less for Social Security than they get back in benefits if they live a long time, so we “subsidize” them.

I see that foreign aid is a public good (if it’s a good at all), whereas Social Security benefits are primarily private goods for the recipients. But it’s not clear to me why paying for public goods is a subsidy, whereas requiring some people to cover other people’s private goods is not.